ASA Investerings Partnership, Alliedsignal Inc., Tax Matters Partner - Page 9

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          to the sale of the PPNs.  In an April 22, 1990, memorandum, Mr.             
          den Baas assured them that any such loss would be added to the              
          value of the LIBOR notes and, ultimately, borne by AlliedSignal             
          when the LIBOR notes were distributed to it.  ABN officials                 
          wanted this arrangement included in the partnership agreement but           
          Mr. den Baas explained that a written agreement was not feasible:           
               Of course, this arrangement cannot be included in the                  
               documentation since in that case it would not be a                     
               matter of a general partnership.  Even a side letter                   
               would seriously weaken this position. * * *                            
          Mr. den Baas further explained that if AlliedSignal reneged on              
          its promise to bear any loss relating to the sale, ABN would not            
          allow the partnership to distribute the LIBOR notes to                      
          AlliedSignal.  After receiving these and other assurances, the              
          loan-approval committees authorized ABN's participation in the              
          venture.                                                                    
          III.  Formation of ASA                                                      
               A.  The Bermuda Agreement                                              
               In Bermuda, on April 17 and 18, 1990, Mr. Matthews, Mr. den            
          Baas, and Peter H. de Beer, Deputy Managing Director of ABN Trust           
          Company Curacao N.V. (ABN Trust), an ABN affiliate, met together            
          for the first time.  Prior to this meeting, Merrill Lynch                   
          carefully explained the proposal to both ABN's and AlliedSignal's           
          representatives.  As a result, all parties entered the meeting              
          with a detailed understanding of the venture and their respective           
          obligations.  The negotiations between AlliedSignal and ABN                 




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